Actions

Three Arizona chefs talk about future of the industry and how Congress can help

Posted at 4:41 AM, Mar 12, 2021
and last updated 2021-03-12 22:16:43-05

PHOENIX — On a front porch in downtown Phoenix, three of Arizona's most prominent chefs take a seat for a candid conversation about the restaurant industry, the support that they feel restaurateurs still need, where the industry is now, and most importantly, what it may look like on the other side of the pandemic.

ABC15 recently sat down with Danielle Leoni, who owns The Breadfruit and Rum Bar in downtown Phoenix, Stephen Jones, who owns The Larder + The Delta in Phoenix, and Chris Bianco, who owns Pizzeria Bianco, Bar Bianco, Tratto, and Pane Bianco.

Both Bianco and Jones have opened, closed, and reopened their restaurants as state guidelines have allowed. Leoni, however, closed her restaurant back in March 2020 and -- aside from a few pop-up events and other projects here and there -- has kept it closed.

All three believe the industry will be forever changed by the pandemic and that restaurants desperately need more financial support.

"If you told us like, two years ago, you're not coming in because you got a sniffle...but now, if you got, you know, allergies, I'm telling you to stay home," said Chef Bianco, reflecting on the last several months.

The restaurant world has certainly changed in the last year -- new guidelines, reduced capacities, more takeout, and delivery -- but these chefs said the industry was already a tough business long before the pandemic. Profit margins are thin and there are challenges with staff retention, pay, increasing food and labor costs, the tipping system, and the ability to provide health insurance.

"So we bundled all the problems that our industry has innately. There are so many issues that we were already tackling before we had a pandemic," said Leoni. "Then you just rip out right from under us any stability we had and we just land - fall flat. And we just keep trying to get up, and we keep trying to get up. And you wonder why people aren't coming back to our industry to work with us? There were already problems in our industry and now I've got to ask you to put your health at risk whether you're working with me or whether you're dining with me."

"What we're currently looking at our forecast, it's bleak," said Jones. "That's what I don't think a lot of people understand about it, is that we have to regain the public's trust for something that was completely out of our control. The pandemic has hit the industry with force during its peak season."

Arizona has an estimated 10,000 true restaurants in the state, according to the Arizona Restaurant Association. Since the pandemic began, an estimated 1,000 to 1,200, or 10%-12%, of those restaurants permanently closed. In a typical year, an estimated 2%-3% of restaurants close, the ARA said.

On top of that, the other challenge that restaurants -- and frankly, all businesses and all of us are facing -- is the uncertainty about when business and life could return to normal.

In Arizona, the hospitality industry typically has two peak seasons -- spring and fall, when the weather is nice enough to be outside to enjoy.

"We'll deal with just the summer because fall, we're gonna be through it," said Jones. "That's not - that wasn't the case. And now we're pretty much in the middle of what will be our season now. We're ramping up, we're going to lose this season and then we're looking at summer again. I don't know quite a few too many people that will want to go through that twice."

Last year, the federal government launched the Paycheck Protection Program where small businesses could apply for a loan to keep their employees on the payroll. All three chefs took advantage of it, but that loan isn't guaranteed to be forgiven.

Jones said he received a $70,000 loan and Leoni received a $120,0000 loan.

"My PPP still isn't forgiven," said Leoni. "So right now I have a giant debt hanging over my head. So not only do I have my restaurant shut down from the pandemic and I'm still trying to pay, figure out how to pay my bills. Just to have the chance to open again I had to say yes to a giant amount of debt. So what have I been given so far? The chance to pay off a loan bigger than I know I can pay."

She isn't alone.

According to the latest figures from the Small Business Administration, some six million PPP loans have been distributed, of which 1 million of those loans have been forgiven. The numbers are not available to see how many have loans have been forgiven specifically in Arizona. However, the SBA does show just over 15,000 loans were approved.

"That's also what people don't really understand about it, too with this entire pandemic, and the whole, that loan will still close restaurants," said Jones. "There will be restaurants out there...that loan won't be forgiven and they're gonna unfortunately have to close because of it."

Additional help could be on the way, however.

Arizona Senator Kyrsten Sinema has co-sponsored The Restaurant Act, a $120 billion long-term rescue plan that's targeted for small local and independent restaurants. Under the bill, if passed, businesses can apply for grants -- not loans -- up to $10 million.

"Our bill will help support independent restaurants around the country, but in places like Arizona it's even more important because our state is so heavily dependent on tourism," said Sinema.

"As you know, 99% of all businesses in Arizona are small businesses so this matters even more for Arizona businesses than other places," she said.

Under the bill, the grants will be retroactive to cover expenses dating back to February 2020 and, unlike PPP loans, they can be spent on just about anything, from mortgage, rent, wages, utilities to food costs.

These chefs are also calling on their loyal customers to help support the bill's passage.

"As this Restaurant Act is going through Congress and people are watching this and people out there who are hearing about the Restaurants Act, you're also going to hear us asking for you to please speak up and say that you want to save restaurants," said Leoni.

As for PPP loans that haven't been forgiven, Sen. Sinema's Office said they want to know about it. Sen. Sinema hopes the Restaurant Act will be passed in March, something these chefs are hopeful for, too.